Oil price rises to new high

THE price of oil jumped again today amid fears of supply shortages due to a possible shipping strike in Norway. US crude climbed to $55.67, passing the previous high of $55.50 and sparking fears that it could rise further if supplies are interrupted.

The prospect of disruption to supplies from the world's third largest exporter led analysts to predict oil prices could even approach $60 a barrel as demand climbs during the cold winter months.

Economists believe that such a rise could tip western economies into recession.

The latest rise in the price of oil is due to a dispute in Norway, where ship-owners are threatening to stage a strike next month in a protest involving rig workers.

The action could disrupt Norway's daily output of 3m barrels of oil a day, compounding already short supplies in the run-up to winter.

Kevin Norrish, oil analyst at Barclays Capital, said that if the strike were to cut off all of Norway's exports, the result would be 'pretty serious'.

He said: 'If it does go ahead, we are into $60 territory without a shadow of a doubt.

'The market's going to be very, very nervous about it indeed.'

Factors including continued unrest in Iraq and the impact of Hurricane Ivan on oil production have left crude in short supply in recent weeks.

Higher oil prices will probably mean further rises in the price of heating oil and further pain at the forecourts.

Earlier this month economists said the sky-high levels were already having an impact on the economy and manufacturing, although at a lesser rate than during the 1970s.

Motorists have been feeling the pinch, with the cost of unleaded petrol on UK forecourts now at an average of 84.2p a litre, the AA reported.

The latest increase has brought prices even closer to the 85p-a-litre levels seen at the time of the pump protests in 2000. The cost of unleaded petrol has risen by nearly 6p since April.